Samsung Display is accelerating the process of shutting down LCD production capacity and converting to OLED production

March 30 news, according to China Securities Journal, affected by the new crown pneumonia epidemic, SDC (Samsung Display) is accelerating the process of shutting down LCD production capacity and converting to LCD for Samsung production. The shutdown plan may be advanced to the fourth quarter of this year. There are three large-size LCD panel factories in South Korea, and the 8.5-generation line in Suzhou, which had no news of closing the factory before.

In 2019, SDC's large-size LCD production area of u200bu200b7th generation and above in South Korea accounted for approximately 12.2% of the world's total. Together with the 8.5-generation line in Suzhou, the proportion increased to 15.7%. Closing factories ahead of schedule is bound to have a huge impact on the global panel supply structure.

SDC's early closure of the factory means that the global large-size LCD panel will accelerate from the competition between China and South Korea to the dominant situation in mainland China. Among the global LCD production lines above 7th generation, the percentage of production area of u200bu200bmainland Chinese manufacturers will increase from 44.8% in 2019 to 53.3% in 2020. With the gradual completion of SDC plant closure, by 2021, this proportion will jump to 65.3%.

According to previous reports, LG shut down South Korea’s LCD TV panel production line at the end of the year and switched to Chinese production. Due to falling LCD prices and global oversupply, LG Display will stop domestic LCD TV panel production in Korea by the end of this year.

From the end of 2019 to February 2020, the price of large-size LCD panels had a trend of price recovery for several months, and after 2020, the epidemic broke out in China and South Korea in the early stage, which caused the industry Worried that the supply of LCD displays concentrated in the two countries will be severely affected, so the downstream has started a stock-holding model. It was once rumored that Samsung might adopt a more gradual reduction in production to cope with this round of panel price increases.

The development of the global epidemic has forced the supply chain to make the fastest response decisions. Since March, the epidemic in mainland China has gradually been brought under control, and work and production have been resumed actively. South Korea has also adopted very strict prevention and control measures. Panel supply has not been greatly affected, but the number of infected countries has increased sharply, especially in Europe and the United States. Exceeding expectations has led to the cancellation of many international events and exhibitions, many countries have begun to close international routes, and international trade exchanges have been blocked, which has seriously affected the supply side and the demand side.

The dramatic reversal of supply and demand led to a decline in the price of large-size LCD panels in March. With the development of the epidemic, the expected decline has continued to expand, and the prices of large-size LCD panels have dropped again. SDC may have decided to shut down LCD production capacity in advance because of this concern.

Various panel manufacturers are also concerned about the downward trend in demand caused by the epidemic, and have adopted a more cautious attitude in actions such as production capacity landing and climbing. Foxconn, BOE, and Huike originally had new production lines that were expected to be mass-produced or lighted up in the first quarter of 2020, but they have all slowed down to varying degrees.

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